SAHYADRI SAHAKARI SAKHAR KARKHANA LTD. versus COLLECTOR OF CENTRAL EXCISE, PUNE

Citation: [2003] 2 S.C.R. 310 · Decided: 25-02-2003 · Supreme Court of India · Bench: S.S.M. QUADRI · Disposal: Dismissed

Judgment (excerpt)

A 
SAHY ADRI SAHAKARI SAKHAR KARKHANA L TO. 
v. 
COLLECTOR OF CENTRAL EXCISE, PUNE 
FEBRUARY 25, 2003 
B 
[SYED SHAH MOHAMMED QUADR1 AND ASHOK BHAN, JJ.] 
Central Excise Tariff Act, 1985-Tariff Item No. 17.01-Centra/ Excise 
Act, 1944-Centra/ Excise Rules, 1944- Ru/e 174-Excise duty-Rebate in 
C payment on the basis of average production during three preceding sugar 
years by a notification-Out of the three years, production in first year while 
nil production in the subsequent two years-Rebate claim calculating the 
average production on the basis of three base years-Determination of average 
production-Held, for the purpose of calculating average production periods 
in which there is nil production has to be ignored-Sugar produced in one 
D year would be taken to he average of all the three years for determining the 
average production. 
· 
Appellant a registered Cooperativt: society was carrying oo the 
busine$s of manufacturing sugar under Tariff Item No.l7.01 under Central 
Excise Tariff Act, 1985. Government issued a rebate notification No.l35/ 
E 83 by which rebate was given on excess production of sugar during the 
incentive period on the basis of average production during the lean period 
of three preceding sugar years 1979-80, 1980-81 and 1981-82. Appellant 
had produced sugar in the year 1978-79 but there was no production 
during the years 1979-80 and 1980-81. Appellant claimed rebate 
F calculating the average production of three years by dividing the total 
production by three years. According to Revenue, out of three years, two 
years were to be ignored for determining the average production of the 
base year. Assistant Collector of Central Excise rejected the claim in excess 
of the admissible amount. Collector of Central excise allowed the appeal 
with consequential relief. In appeal Central Excise and Gold (Cont!ol) 
G Appellate Tribunal set aside the order of Collector and restored that of 
the Assistant Collector. Relying on clause 3 of the notification it held that 
the two years in which there was no production had to be ignored and 
the average could be worked out on the basis of production of one year 
during the relevant period. 
H 
3l0 
) 
.. , 
SAHYADRI SAHAKARI SAKHAR KARKHANA LTD. v. C.C.E. 
31] 
In appeal to this Court appellant-assessee contended that the average A 
has to be worked out on the basis of all the three base years and not only 
on the basis of production of one year; that clause 3 of the notification 
stated that sugar production of more than one year has to be taken into 
consideration while determining average and it docs not expressly exclude 
the number of years in which there was no production; that average refers 
to more than one figure and since in this case production was only in one B 
year, the question of taking average production did not arise as there was 
no production in o·ther two years; that the use of the word 'any' in clause 
3 of the notification is indicative of the fact that clause 3 would apply in 
a case where there was production in atleast two years out of three and 
not where the production was there only in one sugar year. 
c 
Revenue contended that if there was no production in any of the 
three years in the base period, then the same is to be ignored while 
calculating the average production of the said three sugar years; that 
clause 3 of the notification required that year or yea.rs of 'nil production' 
have to be ignored while arriving at average production; and that since D 
'nil production' was there in two years, the period of two years shall be 
ignored for· the purposes of calculation of average production. 
Dismissi11g the appeals, the Court 
HELD: I. Clause 3 of the Notification provides that period in which 
there is ' nil production' bas to be ignored while llrriving at average 
production of the three sugar years. Average production is to be arrived 
at notwithstanding that only one year out of three preceding years is left 
for working out average. The use of the word 'any' in clause 3 in the 
context of the notification has to be interpreted to mean in one or two 
years. Average production of the three preceding years where there was 
no production in two of the three preceding years cannot be arrived at 
by dividing the production of one year by tha:.ee. The use of the words 'any 
E 
F 
of the three sugar years' and then the words .'the average production of 
Sugar' years of 1979-80, 1980-81 and 1981-82 for the purpose of the 

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